Page 1 of 5 pages
Exhibit Index at page 4
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): March 21, 1996
MOLECULAR BIOSYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-10546 36-30878632
(State or other juris- (Commission file (IRS employer
diction of incorporation) number) identification number)
10030 Barnes Canyon Road, San Diego, California 92121
(Address of principal executive offices)
Registrant's telephone number, including area code: (619) 452-0681
<PAGE>
Item 5. Other Events
On March 21, 1996, Molecular Biosystems, Inc. (the "Company") announced
that it and Shionogi & Co., Ltd. ("Shionogi") of Osaka, Japan, had exchanged
notices of breach of their License and Cooperative Development Agreement dated
March 1988 (the "Agreement"). The Company also announced that it had given
notice of Shionogi's failure to make its first annual minimum payment under the
Agreement.
As reported in the Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1995, the Company and Shionogi had been discussing
the possibility of terminating the Agreement. They were unable to agree on terms
for cancellation of the Agreement, and on February 9, 1996, and March 20, 1996,
respectively, Shionogi and the Company served notices of breach of the
Agreement. The Company's notice of breach claims, among other things that
Shionogi violated its obligations to diligently pursue the development and
distribution of ALBUNEX(R) products in Shionogi's exclusive territory,
consisting of Japan, Taiwan and South Korea. Shionogi's notice to the Company
claims, among other things, that the Company failed to supply ALBUNEX(R) meeting
adequate "quality" standards.
The Company has denied all of the breaches claimed by Shionogi. The
product sent to Shionogi at all times met the Agreement's specifications. The
Company intends to pursue termination of its relationship with Shionogi on terms
acceptable to the Company, thus enabling the Company to seek a new distributor
for ALBUNEX(R) and related products in the territory currently licensed to
Shionogi. The Company is uncertain whether it will be successful in terminating
its relationship with Shionogi on acceptable terms. Among the important factors
that could lead to an unsatisfactory termination would be Shionogi's
unwillingness to agree to acceptable terms, and adverse results in arbitration
proceedings concerning the parties' alleged breaches or defaults under the
Agreement.
Under the Agreement, the parties have 60 days following notice of
claimed breach either to remedy the breach or to diligently pursue reasonable
steps toward remedying the breach. The Company is uncertain whether Shionogi
will cure its breaches of the Agreement prior to the expiration of its 60-day
cure period or whether the dispute might otherwise be resolved during this time.
In the event of unresolved disputes, the Agreement calls for commercial
arbitration in New York, although neither party has demanded arbitration at this
time.
In the fiscal year ended March 31, 1995, the Company's sales of
ALBUNEX(R) to Shionogi were $700,000; in fiscal 1996, sales to date have been
$250,000. Shionogi has continued to purchase ALBUNEX(R) , placing its latest
order March 5, 1996.
This Form 8-K contains forward-looking statements that involve risks
and uncertainties. The actual results of the dispute could differ materially
from those discussed.
A copy of the press release that the Company issued on March 21, 1996,
to announce this mater is attached to this Report as Exhibit 10.1.
<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 21, 1996
Molecular Biosystems, Inc.
By:_________________________________
Steven Lawson
Vice President, Legal Affairs
<PAGE>
Exhibit Index
Sequentially
Numbered
Exhibit Description Page
10.1 Press release (March 22, 1996) 5
<PAGE>
NEWS RELEASE
Molecular Biosystems Announces Exchange of
Breach Notices with Shionogi & Co., Ltd.
San Diego, California, March 22, 1996 -- Molecular Biosystems, Inc. (NYSE:MB)
(MBI) today announced that it and Shionogi & Co., Ltd. of Osaka, Japan, have
exchanged notices of breach of their License and Cooperative Development
Agreement dated March 1988. MBI also announced that it had given notice of
Shionogi's failure to make its first annual minimum payment under the Agreement.
The parties have been unable to agree on terms for cancellation of the
Agreement, and on February 9, 1996 and March 21, 1996, respectively, Shionogi
and MBI served notices of breach of the Agreement. MBI's notice of breach
claims, among others things, that Shionogi violated its obligations to
diligently pursue the development and distribution of ALBUNEX(R) products in
Shionogi's exclusive territory, consisting of Japan, Taiwan, and South Korea.
Shionogi's notice to MBI claims, among other things, that MBI failed to supply
ALBUNEX(R) meeting adequate "quality" standards.
MBI has denied all of the breaches claimed by Shionogi. Kenneth J. Widder, MBI's
Chairman and Chief Executive Officer stated, "The product sent to Shionogi at
all times met the Agreement's specifications. MBI intends to pursue termination
of its relationship with Shionogi on terms acceptable to MBI, thus enabling MBI
to seek another company to distribute ALBUNEX(R) and to diligently pursue the
development of FS069 in the territories currently licensed to Shionogi."
In the fiscal year ended March 31, 1995, MBI's sales of ALBUNEX(R) to Shionogi
were $700,000; in fiscal 1996, sales to date have been $250,000. Shionogi has
continued to purchase ALBUNEX(R), placing its latest order March 5, 1996.
This news release contains forward-looking statements that involves risks and
uncertainties. The actual results of the dispute described herein may differ
materially from those discussed. Among the factors that could lead to an
unsatisfactory termination would be Shionogi's unwillingness to agree to
acceptable terms, or adverse results in arbitration proceedings, if any. No
arbitration demands have been filed by either party to date.
Molecular Biosystems, Inc., based in San Diego, California, is a world leader in
the development of ultrasound contrast agents for medical imaging. ALBUNEX(R),
the first FDA approved ultrasound imaging agent is currently marketed in the
United States by Mallinckrodt Medical, Inc. (Mallinckrodt Group Inc. NYSE:MKG).
MBI shares are listed on the New York Stock Exchange under the symbol "MB."
Investor Contacts: Gerard A. Wills, Chief Financial Officer
Stephen F. Keane, Director, Investor Relations
619 824-2212
